TIDMHOME
RNS Number : 6428V
Home REIT PLC
05 December 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
5 December 2023
Home REIT plc
("HOME" or the "Company")
Monthly Update
The Board and AEW UK Investment Management LLP ("AEW" or the
"Investment Manager") provide their monthly update in respect of
November.
Summary
The Company and AEW highlight the following updates, with
further detail on these items also provided below.
-- Rent collection including arrears representing 14% of rent invoiced during the month.
-- AEW continues to make progress in obtaining control of Home
REIT's assets in respect of non-performing tenants. AEW s pursuing
all strategies available to the Company including taking legal
action on selected tenants that are not engaging constructively and
continue to withhold payment of rent.
-- As announced on 28 November 2023, Eden Safe has surrendered
leases on 38 properties. The majority of these properties are
occupied by private rented sector ("PRS") tenants. This enables the
Company to collect the underlying income from these properties
directly from the occupiers.
-- Marigold Housing, which leases 15 properties representing
0.9% of rent demanded in November, entered into liquidation on 15
November 2023. AEW is engaging with the appointed liquidator Path
Business Recovery Ltd.
-- Auction sales have continued. A further 169 properties have
exchanged for GBP33.5m with completion expected in December.
-- GBP16.4m cash balances as at 30 November of which GBP3.3m is
unrestricted. Further receipts are expected in respect of 181
properties which exchanged for sale in September and November that
have not yet completed.
-- Repayment of GBP17.9m of debt to Company's lender in the
period comprising a cash repayment of GBP15.0m and net break gains
of GBP2.9m applied to loan principal.
-- The Company and the Lender have agreed an additional fee of
5.00% per annum charged on the aggregate outstanding loan balances,
on a daily basis from 30 November 2023. The additional fee is
payable at the earlier of 28 June 2024 or on full repayment of the
loans.
-- 1,228 internal property inspections now completed to 30
November 2023, The inspection programme is due to continue during
December and January.
-- The Company's valuer has externally inspected 2,251
properties and internally inspected 194 properties as at 30
November 2023. The Company expects to publish valuation information
by the end of the calendar year.
-- The Company and AEW have now reviewed almost all the
historical transactions for 2,473 properties and are applying
revised accounting policies back to inception.
-- The Board and AEW remain committed to the restoration of the
trading in the Company's ordinary shares as soon as is practically
possible.
FOR FURTHER INFORMATION, PLEASE CONTACT:
FTI Consulting (Communications HomeREIT@fticonsulting.com
Adviser) +44 (0)20 3727 1000
Dido Laurimore
Eve Kirmatzis
Ellie Perham-Marchant
Oliver Harrison
The Company's LEI is: 213800A53AOVH3FCGG44.
For more information, please visit the Company's website:
www.homereituk.com
Portfolio assessment and tenant engagement
-- As part of the stabilisation strategy AEW has been
undertaking a comprehensive review and data collection exercise of
the property portfolio. Analysis of the underlying property
condition is paramount as part of an exercise to determine
suitability, capital expenditure requirements and income and
capital returns prospects as AEW works to rationalise the
portfolio.
-- External inspections performed by Jones Lang LaSalle Limited
("JLL") to date classified the condition of the properties as 0%
very good, 10% good, 65% fair, 20% poor and 4% as very poor.
-- The Company has commissioned capital expenditure reports on a
sample of properties. Further details will be provided in future
reports.
-- Of the 813 property inspections undertaken by Vibrant,
occupancy (at least one bed occupied) is 71% as at the date of the
property inspections with 29% being vacant (whole building).
-- The inspection programme requires significant co-ordination
with multiple parties and is due to continue throughout December
and January.
-- As previously announced on 6 and 9 November 2023, at a series
of public auctions held in early November, the Company exchanged on
the sale of a total of 167 properties. A further two properties
have exchanged post-auction, taking the total anticipated sales
proceeds to GBP33.5m with completion due in early December. Sale
proceeds will be used to provide working capital and reduce
borrowings.
-- AEW continues to work constructively with many tenants to
facilitate restructuring of leases and rationalisation of the
portfolio. As announced on 28 November 2023, Eden Safe has
surrendered leases on 38 properties. The majority of the properties
are occupied by PRS tenants on Assured Shorthold Tenancies
("ASTs"). These ASTs will now transfer to HOME, enabling the
Company to collect the underlying income directly from the
occupiers of these properties, increasing rent collection and
facilitating asset management opportunities. Centrick, a
residential property specialist, has been appointed as property
manager in respect of these properties.
-- AEW continues to make progress in obtaining control of the
portfolio with legal action being taken against
non-performing tenants. During the period, the Company has
served statutory demands and section 146 notice of forfeiture on
selected tenants. The Company has taken carriage of a winding up
petition against a tenant in place of the previous petitioner.
-- Marigold Housing which leases 15 properties, representing
0.9% of rent demanded in November entered into liquidation on 15
November 2023. AEW is engaging with the appointed liquidator Path
Business Recovery Ltd.
Rent Collection, Financial position and related matters
-- Rent collected including arrears represents 14% of the rent
invoiced in the month of November. Whilst this is a decrease on the
previous period's collection of 18%, it is anticipated that rent
collection will vary month on month in the near term as AEW work on
stabilising the portfolio. AEW is pursuing all strategies available
to the Company including taking legal action on selected tenants
that are not engaging constructively and continue to withhold
payment of rent.
-- Following previous announcements, 181 properties are
exchanged for sales and are expected to complete in December.
Sales Exchanged Completed Completed Expected
October November to
Complete
December
September Number: 137* 16** 109 12
Price: GBP22.8m GBP2.7m GBP17.6m GBP2.4m
------------------- --------------------- --------------------- --------------------- --------------------
November Number: 169 n/a - 169
Price GBP33.5m n/a - GBP33.5m
------------------- --------------------- --------------------- --------------------- --------------------
*1 Sale was aborted post exchange
** 1 Sale exchanged and completed via Private Treaty in
October
-- The Board and AEW continue to engage proactively and
constructively with The Company's lender through regular meetings
and continue to service interest payments in full as they fall
due.
-- The Company has utilised GBP15.0m of net sale proceeds
received during the period for repayment of debt to the Company's
lender with associated net break gain of GBP2.9m also being applied
in repayment of the debt.
-- The Company and the Lender have agreed an additional fee of
5.00% per annum to be charged on the aggregate outstanding loan
balances, with the fee accruing on a daily basis from 30 November
2023. The additional fee is payable at the earlier of 28 June 2024
or full repayment of the loans.
-- As at 30 November 2023, the Company has total borrowings of GBP198.3m, comprising a GBP98.3m interest-only term loan, repayable in 2032, with a fixed all-in rate of 2.07 per cent. per annum, and a GBP100m interest-only term loan, repayable on 2036, with a fixed all-in rate of 2.53 per cent. per annum.
-- As at 30 November 2023, the Company had cash balances of
GBP16.4m including amounts held on account with the Company's
lender and subject to certain restrictions regarding its
availability; the Company has GBP3.3m of unrestricted cash.
-- Further sales are expected in the near term as part of the
strategy to stabilise the financial position of the Company.
Publication of the annual and interim reports
-- The independent valuation reports of JLL, as the external
valuer, as at 31 August 2022, 28 February 2023 and 31 August 2023
on the bases of market value and market value on the special
assumption of vacant possession are key to the publication of the
annual and interim reports.
-- JLL has externally inspected 2,251 properties and internally
inspected 194 properties as at 30 November 2023. Currently the
Company expects to publish valuation information by the end of the
calendar year.
-- As previously announced, the Board and AEW have determined
revised accounting policies for revenue recognition and acquisition
accounting to better reflect the substance of the historical
acquisitions and lease arrangements. The revised policies have been
presented to the Company's auditors BDO LLP ("BDO") and are being
finalised.
-- The Company with AEW has undertaken the extensive exercise of
reviewing acquisitions for all 2,473 properties in order to apply
the revised accounting policies. The reviews are now substantially
complete and the resulting adjustments are being finalised. The
resulting adjustments will involve restatement of the 2021 accounts
and will be applied to the 2022 and 2023 accounts.
-- With the revised accounting policies being applied back to
inception and the inspection programme continuing through November
and into December, the Board currently anticipates publication of
the outstanding accounts in early 2024. As previously announced,
BDO is conducting an enhanced audit, the Board and AEW will
continue to work with BDO to publish the results as soon as
practically possible.
-- The Board and AEW remain committed to restoration of trading
in the Company's ordinary shares as soon as is practically
possible.
Shareholder engagement
-- AEW continues engagement with the Company's shareholders.
-- The next monthly update is expected to be announced on 8 January 2024.
-- The second quarterly online presentation open to all retail
shareholders is expected to be held in late January 2024. Further
details will be provided in the next monthly report.
Board succession
-- Further to the Company's previous announcements in September,
October and November 2023, the Company has made further progress in
identifying a new independent Non-Executive Chair. Following a
comprehensive search and process a shortlist of candidates has been
identified and the Company remains well placed to make this
proposed appointment in advance of the restoration of the listing
of its shares. It is expected that the whole Board will transition
entirely within 12 months as announced on 4 September 2023.
Portfolio Metrics
Set out below are certain unaudited key portfolio metrics at 30
November 2023.
As at: 31 August 2023 30 November 2023
Number of properties 2,473 2,307
Number of beds 11,861 11,001
Number of tenants (1) (2) 29 27
Annual rent roll (1 2 3) GBP53.9m GBP43.9m
In period: 1 June 2023 to 31 1 November 2023
October 2023 to 30 November
2023
Properties sold 57 109(4)
Properties exchanged for
sale 121 169
Number of assets with asset
management initiatives completed 246 38
Rent collected in period GBP1.8m GBP0.6m
(1 2)
Rent collection % (1) (2
5) 8% 14%
(1) Excluding 184 properties under separate management
agreements
(2) Excluding 38 properties under property management agreements
with HOME having direct AST leases with occupiers
(3) Contracted rent as at period end
(4) 1 property disposal completed on 1(st) December 2023
(5) Rent collection - rent collected including arrears /rent
invoiced
Geographic Region Number Number Number of
As at 30 November 2023 of Beds of Properties Properties
(%)
-------------------------- --------- --------------- ------------
North East 2,481 776 33.7%
North West 1,943 406 17.6%
Yorkshire and the Humber 1,658 308 13.4%
East Midlands 1,325 259 11.2%
West Midlands 1,153 197 8.5%
South West 790 131 5.7%
London 654 86 3.7%
East of England 377 53 2.3%
South East 494 68 2.9%
Wales 126 23 1.0%
-------------------------- --------- --------------- ------------
Total 11,001 2,307 100.0%
Top 10 Tenants Number Number of % of portfolio
As at 30 November 2023 of Beds Properties annual contracted
rent
------------------------------------ --------- ------------ -------------------
One (Housing & Support) CIC 1,200 234 15.1%
Big Help Project Ltd 1,303 353 14.1%
Supportive Homes CIC * 695 137 8.6%
Bloom Social Housing CIC 645 94 6.9%
CG Community Council 386 54 6.4%
Gen Liv UK CIC * 485 91 6.3%
Dovecot & Princess Drive Community
Association 396 52 5.8%
Noble Tree Foundation Limited 527 143 5.7%
LTG Vision CIC 607 188 4.8%
Mears Ltd 747 177 4.4%
TOTAL 6,991 1,523 78.1%
* In liquidation
Tenants in liquidation (Supportive Homes CIC, GEN LIV UK C.I.C.
and Serenity Support CIC, Marigold Housing account for 16.3% of the
annual contracted rent as at 30 November 2023).
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END
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